Union finance minister Nirmala Sitharaman on Saturday asked public sector banks (PSBs) to adhere to the regulatory norms and focus on robust asset liability and risk management elements.
“Banks should integrate corporate governance policies and ensure prudent liquidity management,” Sitharaman added while inaugurating the corporate office of Punjab & Sind Bank in New Delhi.
She suggested banks frequently run drills for digital safety and ensure adequate firewalls around their systems.
Finance Minister said that the Indian economy moved away from the twin-balance sheet problem of banks and corporates to the twin-balance sheet advantage because of the concerted efforts of the Modi government.
“Profit of public sector banks increased to Rs 1.04 trillion in 2022-23, tripling from what it was in 2014,” she said.
“There was an improvement in all critical parameters like return on asset, net interest margin, and provisioning
coverage ratio,” she added.
Sitharaman said that the 4R strategy followed by the Modi government to revitalise the state-owned banks yielded results.
The 4R strategy refers to recognising the problem of non-performing assets, recapitalising the banks, resolving their problems, and reforming them.
Sitharaman said the banks should endeavour to adopt a proactive approach in reaching out to people to achieve optimum utilisation of financial inclusion schemes.
There should be a focus on credit outreach in states where the credit offtake is lower than the national average, particularly in the northeast and eastern parts of the country, she said, adding that they must aim to increase brick-and-mortar banking presence in border areas, particularly in the those covered in the Vibrant Village Programme.
In the last meeting with chiefs of PSBs, the finance ministry expressed confidence about the resilience of PSBs as they have a liquidity position well above regulatory requirements, diversified deposits, an asset base, and a robust regulatory framework.